On 24 September 2019, US House Speaker Nancy Pelosi announced that the House of Representatives is moving forward with an impeachment inquiry into the current US President Donald Trump. The catalyst for this announcement by the House Speaker is in light of a recent development that the inspector general notified Congress that the administration was forbidding him to turning over a whistle blower complaint.

Nancy Pelosi mentioned that this act is a violation of law, and that there has been reports that there was a phone call by Trump, calling upon a foreign power to intervene in his election. She went on to mention that this is a breach of Trump’s constitutional responsibility.

The Demoncrat’s have also voiced concerns around the findings of former Special Counsel Robert Mueller report on the investigation into Russian Interference in the 2016 Presidential Election. The findings of this report, along with the recent developments mentioned above, will be the centrepiece in the US President Impeachment inquiry.

What is the impeachment process?

The impeachment process is as follows:

  • The US constitutions says, “The President, Vice President, and all civil Officers of the United States shall be removed from the Office on Impeachment for, and conviction of, Treason, Bribery, or other High Crimes and Misdemeanours”.
  • A group of Demoncrat’s, most likely the house judiciary committee could draft articles of impeachment. The House of Representatives would then debate each article of impeachment on the house floor. If a majority of the house vote yes on any article of impeachment, the President has then been formally impeached.
  • The US Senate would then debate the articles of impeachment and vote on each article of impeachment. The President would be removed from office if two thirds of the Senate voted to convict the President.

It is unlikely that US President Trump will be impeached. The reason for this view is that the Republicans control the Senate, which means that a number of Republicans would have to turn on Trump and their own party to impeach the President. This suggests that the impeachment process is likely to run for an extended period of time.

What is the market reaction?

Investors could expect markets to remain neutral to impeachment proceedings moving into the future. A few political and market commentators have mentioned that impeachment proceedings might put the US – China trade war on the back burner for a number of weeks, which is a positive for markets around the world.

Updates on the US – China trade war

US President Trump has presented an optimistic view on the US – China trade war. On Thursday (AEST) US President Trump said that, “a deal to end a nearly 15-month trade war with China could happen sooner than people think and that the Chinese were making big agricultural purchases from the United States, including of beef and pork. In addition, “They want to make a deal very badly… It could happen sooner than you think”.

This is a positive sign for markets around the world if the US and China can come to a trade agreement.

 

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This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

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September 27, 2019